Being self employed with one W-2

[uschles]

Hello,

I've been self-employed in most years since 2020, meaning, I get my income through 1099 from multiple clients and file as self employed. This year as well I've also been getting income from paying clients. Normally clients pay me using 1099. However, for whatever reason, one client insisted on paying me using W-2. I'm not working full time for this client and this income is only a fraction of my total income (~$5,000 or so). I'm not getting any benefits from this client.

Only now it occurred to me - would this prevent me from filing taxes as if I'm self-employed? That is, deducting taxes for a home office, etc? I wish I pushed back on the client's request..

Many thanks,

[VolvoGirl]

No that won’t mess up your self employment on Schedule C .  But you need to enter the W2 separately under Jobs or Wages not on Schedule C.  Actually W2 is better.  You won’t be paying self employment tax on it.   

To Add a W2 enter it under

Federal Taxes or Personal Income (Home & Business )

Wages & Income  

Then Wages and Salaries- Click the Start or Update button

[xmasbaby0]

No the W-2 does not prevent you from filing self-employed income.  You must include the W-2 though--you cannot skip entering it.   You will still prepare a Schedule C for the self-employment income and business expenses for the income gained through the self-employment. Many people have a combination of W-2 and self-employment income.

[uschles]

Thanks for the super quick response! That's good to hear - I was so worried I'd be considered to be a full time salaried employee and would lose the self employments benefits for the months I was getting the W-2.  So in this case, I can still deduct for a home office?

Many thanks

[VolvoGirl]

Yes nothing changes on your Schedule C.   Except that W2 income goes under Personal.  You can still deduct your business expenses.

[uschles]

Thank you so much for the responses!

[PatriciaV]

You may be able to claim a Home Office deduction, depending on your self-employed income. Go ahead and enter the information and let TurboTax handle the calculations for you.

@uschles 

[uschles]

Thanks - on what would this depend?

[VolvoGirl]

Haven’t you taken Home Office before?   

Some expenses, such as home office or section 179 depreciation can only be used to reduce your schedule C taxable income to zero, and not to create a loss. Excess deductions for these carry over to the next year.  And you have to answer yes to both questions about exclusive and regular use, not just one.  The area of your home office must be used regularly and exclusively for business to deduct it.

[uschles]

Oh yes - I have taken Home Office before. I was just wondering whether anything changed because of the W-2, but it doesn't sound like it. Considering I'm 100% self employed and all my income comes through that, I think I should be able to do it. However, I will enter all the details using TurboTax and see what it suggests.

[AnnetteB6]

If you are still primarily self-employed, then you would still qualify to claim your home office expenses.  

Just do not include the W-2 income as part of your self-employment income on the Schedule C.  The W-2 will be entered on its own.

@uschles 

[uschles]

Thank you, I will do that!